Sleeper November/December 2008
Head Office
Hotel Analyst www.hotelanalyst.co.uk
GuestInvest
Luxury assets resilient
One property asset class that has proved by Molinaro Koger. “It’s reassuring to
resilient throughout the credit crunch has know that despite the present turmoil in
goes into
been luxury hotels in gateway cities. the markets, primary assets located in
The sale of the freehold of the Hotel Prince areas such as Paris’ Golden Triangle can
de Galles in Paris for Eu141m is further still secure premium prices and that the
proof of this trend. financing for these assets is still available,”
The property, which is flagged under said Molinaro’s Ed Blum.
administration
Starwood’s Luxury Collection, had been Savills acted for the purchaser, done
leased to the Saudi-based Musallam family through a vehicle called MH Limited
for the past 16 years. The acquisition of the Partnership. The vendor was the Caisse
freehold “demonstrates our commitment Autonome Nationale de las Securite
to the property and to Paris”, said Sheik Sociale dans les Mines. Alexis Delprat,
Doubts over robustness of business model as buy-to-let
Ibrahim Mussallam. A further Eu80m is head of Savills European hotels team, said
hotel bedroom business is put into administration
earmarked to be spent on renovations. the 168-room hotel was one of the largest
The financing for the deal was brokered trophy asset transactions to date.
GuestInvest, the London-based buy-to- the deduction of any third party sales
let hotel bedroom business, has been put commissions). Owners received this
Accor takes control at Orbis
into administration. income but they also had to pay for
The insolvency was blamed on Bank “major services” provided by the agent. Accor has taken a majority stake in the formerly state-owned. Accor took a stake
of Scotland pulling the plug on the This is capped at £500 for the first seven Orbis group, the largest hotel group in in Pannonia in 1993 before eventually
financing, although there have been years. Poland and central Europe. The move is taking full control in 1997.
widespread doubts about the robustness Following the insolvency, unit owners typical of Accor’s stealth strategy of taking Other examples include stake building in
of the GuestInvest business model. have the right to remove GuestInvest a minority stake and building it into full German chain Dorint before eventually
In September 2006, BoS invested £200m as the managing agent. But finding a control. taking over a number of that group’s
in debt and equity in the business and manager willing to take on a contract The control of Orbis was gained by lifting properties following a restructuring.
there were ambitious plans to roll out the where the individual rooms are owned the existing stake of 45.48% to 50.01% With Orbis, Accor has secured a company
concept. separately on 999-year leases will not be through the purchase of Eu35m worth that has 62 hotels with 12,000 rooms. The
Individual rooms at the hotel were sold easy and neither will finding a buyer for of shares. Accor has been a partner hotels include 42 that already operate
to investors offering a return of 6% the freeholds of the properties. with Orbis since 1973 and has been a under Accor brands. During 2007, Orbis
guaranteed for a limited initial period. There are five buildings within the group, shareholder since the company was posted a net profit of Eu41m on sales
Investors were also able to stay for free in the first to open was Guesthouse West privatised in 2000. of Eu307m. The results will be fully
the hotel for up to 52 nights a year. in Notting Hill and this is not part of the A similar strategy was pursued with consolidated within Accor’s from the start
Scepticism about the model centres on administration. Blakes, bought at the end Pannonia, the Hungarian chain that was of July this year.
whether such a return is sustainable of last year, had yet to sell-off its rooms
through the cycle, particularly given that and continues to trade as a conventional
investors would later be liable to fund boutique hotel.
Host buys from Marriott
refurbishments. The three other properties are in Chiswell
The GuestInvest website says current Street, part of the Brewery development
owners have been seeing returns of 8% that was previously owned by Whitbread,
Host’s European joint venture has bought and the Courtyard Paris Defense West -
and the Bank of Scotland logo is used and two properties in Bayswater, the
six hotels on the continent for Eu565m Colombes. In total the six hotels comprise
to reassure would-be purchasers. Some Jones and the Nest, which, like the
including the assumption of Eu434m of 1,954 rooms across three countries.
buyers used their Self Invested Pension Brewery project, have yet to open.
debt. The biggest property involved is the The latter property was the prototype
Plan to acquire units. Sandelson claimed that had he been
757-room Paris Marriott Rive Gauche, the for the new-look Courtyard for Europe
Founder Johnny Sandelson boasted about able to open the three properties then
conference hotel bought by Marriott from developed by Marriott and opened in
creating a new asset class, predicting that creditors would have been repaid. But
Accor in March 2006. September 2006.
it would be widely adopted by the hotel people familiar with the matter said that
The other five hotels were also all Host’s JV, which is with Dutch pension
industry as a method of financing hotels. the company was perceived as having
Marriotts, and comprise the Renaissance fund Stichting and GIC, the Singaporean
As the managing agent of the hotels, overpaid for the sites and then spent
in Amsterdam, the Renaissance Paris government’s property investment wing,
GuestInvest deducted 50% of the heavily renovating them.
Hotel La Defense, the Renaissance Paris now has 17 hotels with nearly 5,500 rooms
sales proceeds at the property (after
Vendome, the Courtyard in Dusseldorf in eight countries.
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